Relationship marketing is a strategy based on building and maintaining a lucrative relationship with customers in aim to build loyalty and long term engagement. When talking about relationship, it means going beyond the initial contact to include the emotional connection in which the customer’s satisfaction is the ultimate reflection. This goal is reached by providing the customer with answers to his worries, and by meeting his needs, all this through open communication.
The businesses that want to survive the fierce rivalry in the market shouldn’t ignore the importance of relationship marketing as the customer’s satisfaction isn’t something to pass by. The relationship marketing is followed in several sectors including banking that lives like any other businesses on the ashes of fierce competition. “To respond to these increasing competitive pressures in the business environment, banks are aggressive toward attracting customers and getting to know them in order to meet better their customers’ needs” stated in a recently published study that was carried by a group of researchers that took banking sector as a sample.
The study is carried by a group of researchers from State University of Jakarta, Indonesia and Centro Internacional “Carlos V”, Universidad Autonoma de Madrid, Spain and published in a Journal of Marketing Research and Case Studies. The research tried to decipher the impact of relationship marketing on customer loyalty “through customer trust and customer satisfaction.”
In old marketing strategies that are referred to as transactional marketing (TM), the focus is based on increasing the customer numbers as well as on maximizing sales without much emphasis on building relationship with the customer. The study stated that “The transactional marketing, which is the old-fashioned paradigm, used to emphasize the concepts of 4Ps (price, product, promotion, and place) that focused only on attracting businesses, but not so much on customer retention…retaining the companies’ existing-customers is more profitable than attracting new one.”
The TM then is a marketing strategy that ignores customer’s loyalty or any kind of satisfaction. To fill that gap, the relationship marketing came and it is “developed on the basis that customers vary in their needs, preferences, buying behavior and price sensitivity” the study stated. Relationship marketing is aware that customers are not one coherent unity, but each customer has his needs that differ from the other.
The transactional marketing ignores customer retention and doesn’t invest much in the customer experience, and that can lead to short term customer relationships. But, the relationship marketing in turn valorizes the customer’s loyalty and makes it a backbone of any strategies targeting customers. According to the study “relationship marketing also helps to increase market share, profitability and reduce the cost… (And) if relationship costs are minimized and relationship revenue is maximized over time, satisfied and loyal customers should generate greater profitability than short-term customers.”
Today, maintaining a relationship with the customer is so important than ever, and building a rich customer experience is something inevitable for the success of businesses. According to the study “effects of relational marketing tactics on customer loyalty through customer satisfaction and trust are greater than the straight one… customer loyalty not only makes a platform where the customer is ready to stay maximum time with the organization and causes long-term benefit, but also provides a name of inspiration with the company products or services.”
The customer loyalty is a core element in business success and “any organization that systematically sets out to convert customers into advocates, should put customer loyalty at the heart of their growth strategies” the study stressed out.